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AARP CEO William D. Novelli Challenges Drug Companies on High Cost of Drugs

The following letter was sent today by AARP CEO Bill Novelli to the CEO or Chairman of these pharmaceutical companies:

  • Abbott Laboratories
  • Allergan, Inc.
  • AstraZeneca, LP
  • Aventis
  • Bayer Corporation, Pharmaceuticals Division
  • Bristol-Myers Squibb Company World Wide Medicine Group
  • Eli Lilly and Company
  • GlaxoSmithKline
  • Hoffmann-La Roche Inc.
  • Johnson & Johnson
  • Merck & Co., Inc.
  • Novartis Pharmaceuticals Corporation
  • Pfizer Inc.
  • Purdue Pharma L.P.
  • Schering-Plough Corporation
  • Wyeth

Dear Pharmaceutical CEO:

The enactment into law of Medicare prescription drug coverage last year will benefit millions of older Americans and their families. While the majority of Medicare beneficiaries now will receive help with their drug costs, those with low incomes and high expenses will especially benefit.

But as we all know, the problem of high drug prices is still a serious issue in the United States. Prices rose last year faster than the cost of living. Too many people cannot afford the drugs they need, and as many studies show, the result is very substantial non-compliance with physicians' recommendations. In addition, many people do not use generics despite their comparable effectiveness and lower cost. Containing drug costs is critical to the health security of older and disabled Americans and to the success of the Medicare prescription drug benefit.

As indicated in survey after survey, and in the letters we receive daily from our members, Americans of all ages are seriously concerned about their inability to afford the drugs they need.

We, as did many others, worked hard for the passage of the Medicare law last year. But while 2003 was the year of enactment, 2004 must be the year of affordability.

AARP and our 35 million members are the first to acknowledge the important role of pharmaceutical research and innovation in helping us live longer, healthier lives. As we have said before, we will work with you to sustain that progress. However, it is important to acknowledge that the pharmaceutical industry will see a significant increase in utilization of their drug products as a result of the new Medicare law. This increased sales volume should allow for additional price efficiencies and thus lower prices for consumers.

We are pleased that many in the industry are already working to ensure that people do benefit from the new Medicare law. We are particularly pleased by the efforts of some companies to enroll low income beneficiaries in pharmaceutical assistance programs, including pledges to provide additional assistance for Medicare beneficiaries who use up their $600 annual benefit. These are helpful steps, but much more must be done.

First, we are calling on each pharmaceutical company to limit price increases to no greater than the level of inflation for current drug products. We also urge you to constrain the prices of new drugs, and to use your influence to curtail greater mark-ups throughout the distribution chain to retail. We have begun to monitor prices for specific drugs at regular intervals and we will report findings - both favorable and unfavorable-to our members and to the public.

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